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Begin Part 2 of 2
THE PLAYS:
Reading the Plays: Please note that when we reference the 10, 18, and 50 day moving averages (MVA), those are exponential moving averages (EMA). The 200 day moving average is always simple (SMA). We will note when we reference a particular MVA differently, e.g., a simple 50 day MVA. Please click on the Yahoo and chart links for company and charting information.
New note for reading plays: A "prior high" refers to the high at the start of a base.
BEST PLAYS: MHK made its breakout today! The stock remains a buy on this move up to 47.86. Another breakout was from BLL, which made a strong move up after testing its recent breakout! TSA hit another new closing high. CBT is a stock we covered in June that broke out today on very strong volume. Check out ACTN below; it is moving up after testing its breakout.
Stocks from the weekend report:
CAO: Pulled back on lower volume from Friday's breakout move.
SCOR: Tested below support but closed back over it on rising volume in its handle.
PPDI: Moved up early, but that was just a head fake; the stock tumbled to the 200 day MVA! Got a slight bounce back, so we will see what it can do from here.
FDO: Tried to break out of the ascending wedge, but volume wasn't there yet (it was higher). The stock showed a doji, and still looks good in the pattern despite the pull back off the high.
PSFT: Dropped over three points for the put play.
Previous plays:
MCK: Trying to move up but volume remains low and below average. The stock closed above the short term down trendline in the pennant pattern.
BJCT: Pulled back on its breakout move.
BAX: Still looks good in its handle after bouncing from a test of the 50 day MVA Tuesday. Volume was strong at average levels, so this one is one to watch (covered 8-30).
SRCL: Made a promising move Friday, but closed lower again Tuesday. Looking for a move up to 50 (hit resistance at 48.80).
SEIC: Has not made the move below 40, but is still on watch for the put play.
APPB: Is likely to pull back here.
ANSS: The pattern still looks very good if the stock can hold on; volume decreased again, which is a good sign.
ITRI: Volume was stronger but the stock couldn't move higher; it did bounce back from support (10 day MVA), so we haven't given up on it yet.
K: Tapped support (18 day MVA) on the low then bounced on rising volume. Good action.
PATH: Stronger volume and the stock tapped near 32 on a move below the 18 day MVA. It closed back above it, though, so we are still watching it.
IMCL: Tried to move up but ended up selling back, but is holding with a doji above the 10 day MVA in the handle of its cup base.
SCRI: Tanked below the 50 day MVA on heavy selling.
TTWO: Wants to break support of its 200 day MVA.
EMBX: Is looking interesting as it runs up the right side of its cup base.
ROST: Hit a new all-time closing high today.
Best Plays:
1) DP: Making a strong move up in its pennant pattern.
2) CFFN: A tight lateral pattern.
3) ACTN: Moving up after testing the breakout!
4) BRCM: Could turn into a good downside play on a break of support.
New:
DAP (Discount Auto Parts--$14.52; +0.02; no options): Retail: Auto Parts
http://biz.yahoo.com/p/d/dap.html
STATUS: In an ascending wedge that is holding support above the 18 day MVA (14.14), and above the May high of 14.20, and showing a doji Tuesday as volume rose to 148,800 (avg. 80,000). Because of the high volume and the doji, the stock is likely to pull back to test the 10 day or 18 day MVA again (the former is at 14.29), but as long as it holds above the 18 day MVA, we will look for the breakout (pattern high is at 15.25 in July. DAP shows huge money flow and buying. Target on a breakout: 18
BUY POINT: 15.38, on minimum breakout volume of 108,000. Stop: 14.50. A buy on the breakout up to 16.15.
POSITION: Stock.
http://www.investmenthouse.com/cd/dap.html
DP (Diagnostic Products--$40.30; +1.05; optionable): Drugs.
http://biz.yahoo.com/p/d/dp.html
STATUS: In a large ascending wedge since early June, and made a move up today back toward the pattern highs (41.78 in early June, 41.16 in August). Today the stock ran to 40.90 before pulling back to close, with volume blasting up to 200,700 (average 97,500).
Relative strength broke out, and we will look for the stock to continue up toward the breakout. If the stock continues today's pullback first, the recent August high is 39.60, with the 10 day MVA at 38.85. Target: 48.
BUY POINT: 41.28 on minimum volume of 130,000. Stop: 38.39.
POSITION: Stock and/or December $35 calls to buy (DP LG).
http://www.investmenthouse.com/cd/dp.html
CFFN (Capitol Federal Fncl--$19.57; +0.02; no options): Savings & Loans
http://biz.yahoo.com/p/c/cffn.html
STATUS: In a lateral pattern that formed as a test of the breakout; CFFN had run to a June high of 19.45 on a strong breakout run from a flat base, then corrected back to the 50 day MVA as volume held steadily below average for the duration. The stock showed a tight doji Tuesday, the fourth consecutive, as volume shot above average, and if it can hold the support (10 day MVA at 19.52, which has held the pattern for 7 days), we look for a breakout. The stock may move down to the support and bounce. Volume rose to 138,300 (avg. 108,000). Like the hold of support above the June high. The stock shows huge money flow and strong buying. Target: 23-24
BUY POINT: 20.13, on volume of 145,000 or higher. Stop: 19.35 A buy on the breakout up to 21.14.
POSITION: Stock.
http://www.investmenthouse.com/cd/cffn.html
Updates:
ACTN (Action Performance--$28.70; +1.05; optionable (QNC): Basic Materials Wholesale
http://biz.yahoo.com/p/a/actn.html
STATUS: Covered August 27 on the stock's breakout from a short base. It pulled back to test the 26.60 level, and Tuesday broke out to a new 52-week high on excellent volume of 611,600 (avg. 393,272). Stocks can post better gains on a run after testing the breakout, so we will see what the strong volume today can do for achieving that goal. ACTN shows super money flow and strong buying. Target: 33-34
BUY POINT: 29.20, on continued strong volume. Stop: 27.50
POSITION: Stock and/or October $20 calls to buy (QNC JD).
http://www.investmenthouse.com/cd/actn.html
Puts:
OEX (Standard & Poors--$578.04; +0.64; optionable):
STATUS: Showed another closing doji Tuesday after last week's 3-day slide and Friday's doji. The index surged earlier in the day and made it back over the 10 day MVA (588.29) for the upside play just as we anticipated, but sold back down late as volume rose to 1.17 million (avg. 1 million). From here we are looking for a put play on a move below 572.41 (Thursday's low) on continued selling. The initial target is the April low at 554.47.
BUY POINT: 572, on continued rising volume. The index may try to move up and test 572.41 before heading back down in earnest ("kiss good-bye").
POSITION: September $580 puts to buy (OEB UP). Deltas unavailable at the time of this writing; please check with your broker for those.
A put play from the Member Portfolio:
BRCM (Broadcom Corp--$30.73; -1.42; optionable (RCQ): Electronics: Semiconductor
http://biz.yahoo.com/p/b/brcm.html
STATUS: BRCM tapped resistance on the high of 34.12 and sold back down toward support as volume rose to 11.5 million (avg. 10.1 million). The stock hasn't had success breaking back over the 10 day MVA (currently at today's high) since about mid-August, and on today's strong volume, we are looking for a potential drop to an initial target at the 23.50 level, though a possibility is the April low of 20.88. Intraday low of 30.69, a price hit a few times since March.
BUY POINT: 30.50, on continued rising volume.
POSITION: September $40 puts to buy (RCQ UH).
http://www.investmenthouse.com/cd/brcm.html
THE PORTFOLIOS: Each report, we look at these to see which is in a buy position. We don't cover them all each time, just the ones that look ready to pick up a few shares.
THE LEADERS:
New Leaders: ESRX, ACS, NVDA, DGX, EBAY, FRX, PSFT, ADVS, BMET.
Previous Leaders in which we are still interested: ADBE, SEBL, VRSN, VRTS
NVDA: Sold to support at 80; if it breaks it can be a play down to the 72.50-75 range.
PSFT: Dropped 3 points as it made the move we anticipated. If it breaks below 29.80, can make the drop to the 22-23 range.
BMET: Tried to stick a move over the 50 day MVA (just above 29) but it wasn't too be on the late day market pullback
ADVS: Threatening again to break support at the 200 day MVA
ACS: Holding above the up trendline and showing a doji just under the 18 day MVA. Volume was much lower and well below average, which is helpful.
ESRX: Broke the 50 day MVA Friday but held with a doji Tuesday. Volume was lower, so we will see if the stock can hang on here.
DGX: Showing decreasing volume as it sticks to the underside of its 18 day MVA. Can drop to 60 or lower if it loses its hold.
UP & COMERS PORTFOLIOS:
LNCR, BJ, LOW, HI, THQI, BBBY, IGT, CHS, KG
THQI: Back below the 50 day MVA; volume is below average, however, and just barely higher.
BBBY: Another stock that made a good move earlier in the day (volume was higher), but couldn't hand on to the high of 30.50 (above its 50 day MVA).
LNCR: Now this one held onto much of its move, though it did close back under the 50 day MVA (off the high of 29.80). Volume was higher.
KG: Holding up with a doji just under its 18 day MVA.
MEMBER PORTFOLIO: New portfolio as selected by the subscribers. Some of these stocks are still struggling to move higher in their bases, and will likely continue to trade in close ranges just like the market. We'll be ready to catch them when they are ready to move. The new list: BRCM, CHKP, AMAT, JNJ, MSFT, AOL, HGSI, BUD, PXLW.
Old members: BRCM, CHKP, CSCO, EMLX, IDTI, INTC, JDSU, MVSN, NT, PWER, SUNW, VTSS
JNJ: Everybody loved this stock today; it broke out on good news that its coated stints had a zero percent return of clogging. It did pull well off the high of 58; may be in for a pullback.
BUD: After the dismal drop to the 50 day MVA (43), BUD bounced and on strong volume moved up to its down trendline. We will see if it takes it out again. 44 is also sturdy-looking resistance.
Good Investing!
Jon L. Johnson and The Daily Staff
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners of Online Investment Services, LP or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
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